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Sensex Outperforms 32,000: Why & How

 

Not a very long ago, on April 26, 2017, the Indian stock market celebrated a historic event as the Sensex closed above 30000 for the first time.

Exactly eleven weeks since then it’s again time to celebrate the occasion of the Sensex’s achievement for attaining another milestone. On Thursday, July 13, 2017, the Sensex kissed the glory of 32,000 points for the first time ever. Thanks to the low inflation report released a day before the iconic event i.e. on Wednesday, July 12, 2017. The Sensex opened with a wide gap over 90 points and crossed the psychological point at 32,000, whereas the National Stock Exchange’s Nifty 50 index is approaching close to 10000.

The surge is also linked to a positive lead from Asia after US Federal Chief indicated a gradual approach for raising the interest rate. This made the investors go in for a fresh bet which as a consequence led to a kickass furtherance of the Sensex.

The Sensex took about 33 sessions to reach to the point 32000 after closing above 31000 for the first time in May 2017. The latest gain of the Sensex by 2000 (6.3 per cent) point has come in 54 sessions. The Indian capital market has gained 20 per cent this year and is among the best performance globally. Needless to say, Rs. 1 lakh crore of investment by foreign institutional investors (FIIs) and mutual funds (MFs) has laid direct hands to this impeccable gain. The Sensex now trades at 20 times of its estimated one-year forward earnings, the highest in seven years and above the long-term average of 17 times. Despite lofty valuations, many market analysts expect further growth due to hopes that corporate earnings will soon enter a high-growth zone.

Mutual funds have also played an important role in this incredible surge as there have been net buyers of stocks for 24 straight sessions. In the last month, the fund investors pumped in almost Rs. 9,500 crore which was twice the amount pumped by FIIs. On a year to date basis, the MFs poured in 43,000 crore, while FIIs poured in 55,000 crore.

Strong momentum in the market is palpable due to the reason of 186 stocks being scaling new one year highs on Thursday, July 13, in addition to many listed stocks doubled from their IPO prices. The mid-cap and small-cap too are trading around their lifetime highs.

A further rise in the capital market and Sensex is what many financial experts are looking forward to and advising the investors to take a three to five-year view if planning to invest at this particular point.

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